Aerospace and Defense

In the aerospace and defense industry, there aren't too many major players,
but they're all big and getting bigger.

As in telecommunications, mergers have shaped the landscape of the aerospace
and defense industry. Boeing became the world's largest aerospace company
following its 1997 acquisition of McDonnell Douglas, formerly the world's
largest military aircraft maker, and its 1996 acquisition of the defense and
space units of Rockwell International.

Lockheed Martin was formed from the merger of Lockheed and Martin Marietta,
and it recently acquired the space systems division of General Dynamics, GE
Aerospace and the Loral Corporation.

Raytheon doubled in size by acquiring the defense businesses of Texas
Instruments and General Motors' Hughes Electronics.

In July of 1998, Lockheed Martin and Northrop Grumman were on the verge of
another merger, which would have made the combined company the largest in the
world. But the U.S. government opposed the merger on anti-trust grounds. "The
government's policy has had a chilling effect on mergers in the industry," says
Norman Augustine, former CEO of Lockheed Martin.

The government's policies in support of basic research, defense and the space
program also have had an effect on the industry. The most significant global
events to affect the defense industry were the fall of the Berlin Wall and of
the Soviet Union. Augustine remarks: "We lost about 50% of our market when the
Berlin Wall fell in 1989."

More recent events have had an impact as well, such as the Asian economic
turmoil which has affected Northrop Grumman's ability to procure equipment
manufactured in that region. The emergence of a unified European community could
also work against the U.S. aerospace industry if the Europeans adopt a "Fortress
Europe" policy and conduct business only among regional aerospace industries.

ON THE HOME FRONT
In the United States, research and development of new technologies play an
important part in the aerospace industry. Materials research and information
systems are increasingly important, as are work on sensors and propulsions and
all aspects of electronics, especially micro-miniaturization.

Boeing's Defense and Space Group is developing the F-22 fighter (with
Lockheed Martin), the V-22 Osprey tilt-rotor aircraft (with Bell Helicopter
Textron) and the RAH-66 Comanche helicopter (with Sikorsky). The company is also
collaborating on a $9 billion network of satellites for communications firm
Teledesic, of which Boeing owns 10%.

The trend for companies in this sector to work collaboratively is atypical,
as intense competition among the big aerospace companies is legendary and has
been partly responsible for recent downsizing. There have been thousands of
layoffs at Lockheed Martin, and in August 1998, Northrop Grumman announced the
reduction of more than 10,000 positions by the end of 2000. Nonetheless,
Northrop Grumman expects an increase of approximately 2,500 employees in its
information technology and electronics business areas by the end of next year.

According to Augustine, Lockheed Martin hired more than 2,000 recent
engineering graduates in 1997, and the industry in general will continue to hire
in all technical fields, especially systems engineers, electronics engineers,
software engineers and computer scientists. Lockheed Martin also has a need for
aerospace engineers, mechanical engineers, industrial engineers, mathe-maticians
and physicists.

Boeing has shown an interest in entry-level mechanical, aerospace and design
engineers. The Boeing home page (www.boeing.com)
lists the attributes the company seeks in an engineer, including knowledge of mathematics, physical and
life sciences and information technologynot just computer literacy.

Augustine also notes that the industry is in hot pursuit of graduates who
possess an understanding of the context in which engineering is practiced,
including economics, business practices, history and the environment. And don't
underestimate the value of good communication and presentation skills. "Without
the ability to make a presentation and to deal with non-engineering society,"
says Augustine, "the profession suffers."

Top Guns

Boeing, based in Seattle and employing more than 234,000 people worldwide, is
the world's largest aircraft manufacturer (both commercial and military) and the
nation's largest NASA contractor. The company's Boeing 737 is the best-selling
jetliner in aviation history, and its planes have a distinguished combat record.
The Boeing B-17 (Flying Fortress), a long-range heavy bomber, was the backbone
of the U.S. Eighth Air Force and fought in every theater of World War II; the
McDonnell Douglas F-4 (Phantom) was a noted fighter plane during Vietnam War.
More recently, Boeing built the Space Shuttle orbiters and main engines. It
leads the U.S. industry team for the International Space Station, which is the
largest international science and technology venture in history, with 16 nations
working cooperatively toward its success.

Lockheed Martin, in Bethesda, Md., is the world's second largest aerospace
and defense firm. The U.S. government accounts for about 66% of Lockheed
Martin's sales; foreign governments and commercial operations each account for
about 17% of sales. It produces the Lockheed F-117 (Nighthawk), which is almost
invisible to radar and played an important role in the Gulf War of 1991, as well
as the Lockheed SR-71 (Blackbird), the world's fastest jet. It also manufactures
the Trident II submarine-launched ballistic missile and the F-16 fighter, and
produces the spacecraft for Motorola's new IRIDIUM satellite communication
network.

Raytheon, headquartered in Lexington, Mass., follows Boeing and Lockheed
Martin as the third largest aerospace and defense company. It has three main
segments: electronics, aircraft and engineering and construction (focusing on
industrial projects). Its largest segment is electronics, where its products
include environmental monitoring systems, air traffic control systems, Tomahawk
and Patriot missiles and other defense systems, global broadcast systems and
marine electronics. The company is a major U.S. manufacturer of small passenger
aircraft (Hawker, Beech and King Air).

Other companies include Northrop Grumman in Los Angeles, which runs a close
fourth in the aerospace industry with a work force of 54,000; the Sundstrand
Corp., a Rockford, Ill.-based international designer and manufacturer of a
variety of proprietary, technology-based components and subsystems for aerospace
(57% of 1997 sales) and industrial (43% of 1997 sales) markets; and TRW, which
manages its space systems, automotive products, systems integration and
credit-reporting operations from Cleveland.